Asian Stocks Gain as Policy Changes Take Root

CNBC.com

Monday, 3 Nov 2008 | 4:43 AM ETCNBC.com

SHARES

Asian stocks rose for a fifth straight day Monday on hopes policy efforts so far to dampen the impact of the financial crisis would ultimately take hold, though data still painted an ugly picture of the global economy.

Investors were also cautiously shopping for bargains after shares and commodity prices globally in October posted their biggest decline ever on fears of a deep recession in the world economy.

Expectations of more interest rate cuts this week from Australia, Britain and the euro zone following last week's reductions from China, India, Japan and the United States among others has at the least slowed the panicked selling of risky assets that dominated most of October.

The U.S. dollar began the week flat, after recent strong rises, with investors looking forward to more major central bank interest rate decisions this week, with more cuts expected. Gold continued to fall, after its biggest monthly drop in 25 years, and oil futures rose to trade above $68 a barrel level.

Japanese markets are closed today for the Culture day holiday. Markets will reopen Tuesday.

Seoul shares ended 1.44 percent higher after volatile trade that saw them swing in and out of positive territory, with banks bouncing back from extended losses but some exporters trimming earlier gains to end lower. Banks including Shinhan Financial Group staged a rebound, helped by South Korea's economic stimulus plan, which is aimed helping the troubled real estate and construction sectors.

Australian shares finished up 5.1 percent, boosted by gains in banks ahead of an expected rate cut in Australia on Tuesday, while heavyweight miners BHP Billiton and Rio Tinto also rose. The Reserve Bank of Australia is widely expected to cut its key rateby at least 50 basis points, following up last month's shock 1 percentage point cut, to help cushion the domestic economy in the face of a global downturn. Australia's top five bank shares rose between 3.8 percent and 6.6 percent, led by Australia & New Zealand Banking Group.

Hong Kong shares rose 2.7 percent, with Chinese banks leading the charge after a central bank official indicated Beijing had abandoned its strict caps on lending to try to shore up growth amid a global slowdown. State media also quoted a central bank spokesman as saying the People's Bank of China must flexibly adjust its economic policies, including monetary policy.China has cut interest rates three times in six weeks after a series of tightening measures earlier to rein in runaway inflation.

Singapore's Straits Times Index was nearly 5 percent led by gains in financials such as United Overseas Bank, boosted by gains in regional markets. Singapore Telecommunications gained 6 percent and DBS Group rose almost 5 percent.

China's Shanghai Composite Index rose only slightly, despite measures taken by the government to further ease banking restrictions.